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Stock Madness Final Four: Canadian National Railway

Underdog fans like me have been left a bit disappointed this year, what with the NCAA Final Four comprised of all No. 1 seeds.

But never fear; bracket-buster Canadian National Railway (NYSE: CNI) has made it into the Fool's Final Four after upsetting the more popular National Oilwell Varco (NYSE: NOV) in the Elite Eight.

Now we're facing the second-most-popular stock on Motley Fool CAPS, which is none other than Google (Nasdaq: GOOG) .

Tale of the tapeTo show just how much of an underdog Canadian National is in this matchup with Google, consider the weigh-in results:

Google

Canadian National

Market cap

$146 billion

$24 billion

Average daily volume

7.8m shares

1.5m shares

No. of Wall St. analysts covering

28

11

No. of CAPS ratings

10,573

497

Source: Yahoo! Finance, as of March 28.

No matter how you cut it, CNI is at a huge disadvantage to Google in a popularity contest such as this. It's my job to convince you that CNI deserves an "outperform" pick on Motley Fool CAPS. The more picks CNI gets, the better chance it has of taking down Mr. Google.

Bear market stalwartIn the previous round, I highlighted CNI's diverse revenue sources, its operational excellence, and its strong management team. This time around, we'll look more closely at CNI's track record during bear markets.

During the last bear market, which spanned from roughly August 2000 through March 2003, CNI chugged along, delivering 42% total returns. Even though Google wasn't a publicly traded company during this period, we know what happened to Internet stocks like Yahoo! (Nasdaq: YHOO) when times got tough (hint: it rhymes with "limber").

Might things be different for Google in a bear market? If recent events are any indication, that appears unlikely. Simple whispers about recession have punished Google since November. Google sits 38% off its 52-week highs and Wall Street analysts are starting to question the sustainability of its growth rate.

While CNI itself hasn't escaped concerns of an economic slowdown, it is worth noting that the company remained free-cash-flow-positive during that 2000-2003 weak spot. That financial vitality allowed CNI to raise its dividend by a third over the same time period. Moreover, in 2001, it acquired Wisconsin Central, giving CNI better routes around the Great Lakes, most importantly linking Chicago with western Canada.

CNI expertly handled adverse economic conditions by rolling up its sleeves and going about business as usual. As CEO E. Hunter Harrison put it in the 2002 annual report:

Railroading is a tough business, but not necessarily a complicated one. Success is all about staying focused on the basics: one, providing good service ... Two, managing your costs. Three, focusing on asset utilization. Four, doing the first three things without getting anyone hurt. And five, developing your people.

This approach has paid off, with CNI well positioned to ride along the recent railway boom. CNI shares have returned 280% from March 2003 to the present.

Let's win this thing!With mounting concerns of recession, investors would be wise to consider tried-and-true and perennially relevant businesses, helmed by top-notch leadership with a long track record of increasing shareholder value. Canadian National is a perfect example of such a company.

Can Google say the same? The market doesn't seem to think so.

If you think Canadian National deserves an "outperform" pick, click here to register your vote on Motley Fool CAPS. Let's turn CNI from Cinderella into the champion!

Who's going to take home the trophy? See the rest of this year's bracket.

Fool contributor Todd Wenning is ranked 382 out of more than 94,000 investors participating in Motley Fool CAPS. He does not own shares of any company mentioned. The Fool's disclosure policy keeps on chuggin' along.

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